Luton-based airline EasyJet has announced its support for Apollo’s £5.7 billion takeover bid, reversing a decision made just last Sunday to recommend a proposal from Castlelake. The airline stated it was “no longer minded to recommend” Castlelake’s offer following Apollo’s intervention.
This development unfolds against a backdrop of financial challenges for EasyJet, whose shares had plummeted by more than a third of their value before takeover interest emerged. The airline’s difficulties were exacerbated by soaring jet fuel prices, a consequence of the conflict between the US and Iran, which also disrupted travel plans.
In May, EasyJet reported a headline loss after tax of £377 million (€442mn) for the six months ending March, marking a 27% deeper loss compared to the previous year. This occurred despite a 12% increase in revenue, which reached £3.95 billion (€4.6bn). CEO Kenton Jarvis acknowledged that the second half of the financial year would also be impacted by elevated fuel costs and reduced visibility over bookings, though he expressed confidence that EasyJet was “well placed” to navigate the turbulence.
The broader airline industry is also facing headwinds. Industry-wide, the International Air Transport Association (IATA) warned last month that global airline profits are projected to halve this year.
Both Apollo and Castlelake face a significant regulatory hurdle in the form of EU law, which mandates that airlines operating within the bloc must be majority-owned and effectively controlled by EU member states or qualifying European nationals. Castlelake had planned to satisfy this requirement by partnering with Irish aviation executives Peter Bellew and Mark Breen, who would have held a controlling stake through an EU-based company.
Apollo, for its part, has committed to preserving the EasyJet brand by extending the existing licence agreement with easyGroup, the entity founded by Sir Stelios Haji-Ioannou. Sir Stelios, along with his family, holds approximately 15% of the airline and receives a royalty based on its revenue.
Under British takeover regulations, Castlelake must make a final decision on whether to submit a revised bid or withdraw by August 3. Apollo faces a slightly later deadline of August 7.
